Leading a public department or agency is famously difficult, and it’s only getting harder. In a McKinsey survey of over 800 senior public sector leaders worldwide, we identified the trends that are most likely to disrupt delivery of government missions—from tighter budgets to tougher competition for talent to technological change (see sidebar, “About the research”).
The good news is that many leaders are rising to these challenges and navigating the constraints of public sector institutions by honing in on six essential practices of leadership excellence (Exhibit 1). The most effective leaders are recognized for their character, courage, and values—and for the capabilities of setting clear direction and getting things done, despite an environment of flux.
Our research underscores the timeless truth that the work of leadership is never finished. The accomplished leaders we surveyed had well-developed strengths in critical practices, but they also recognized the need for ongoing development, especially in managing external stakeholders.
Public sector leaders face escalating disruption
The public sector finds itself in a period of unprecedented disruption, navigating a series of shocks, including economic uncertainty, geopolitical instability, and the reform of energy systems. It seems this turbulence is set to intensify, with nearly 80 percent of public sector leaders anticipating greater disruption from 2025 to 2030 (Exhibit 2). This is a striking finding, given that many respondents pointed out that the past five-year period was highly disruptive, citing the COVID-19 pandemic, geopolitical conflict, political volatility, and the rising impacts of climate change as the most challenging issues.
The leaders we surveyed spoke eloquently of this accelerating disruption. One said, “I expect to see a combination of additional external factors, conflict, cost of living, and challenges on institutions bearing on the system—combined with financial pressures.” Another leader emphasized, “The external environment is getting more volatile. And citizens’ demands and expectations are also rising. In combination, these could result in radical changes.”
We asked survey respondents to identify the factors that have the greatest impact on how they lead in the current operating environment—and to look five years ahead to identify the trends that will present the most difficult challenges for them in the future (Exhibit 3).
The overall trends included:
- Tightening budgetary constraints. These were seen as the dominant trend in both the current operating environment and in five years’ time. Several leaders highlighted the challenge this posed, with one saying, “Ultimately, you are interested in serving citizens, and you are spending money, not making it. You are managing an organization to create public value.”
- Limitations in the ability to attract and retain talent. This was a further key factor impacting leadership in both the current and future environments. As one respondent said, “There has never been such a small share of talented and smart people in government as there is today. Today, smart people have such a plethora of opportunities, which are much better paid, much better rewarded, in every sense.”
When looking five years ahead, leaders envisaged three trends rising to greater prominence:
- The impact of disruptive technologies such as AI and automation. Governments will need to navigate the rapidly evolving landscape of disruptive technologies. While these technologies offer immense potential for efficiency and innovation, they also pose significant risks if not managed effectively. As one leader pointed out, the challenge for the public sector is “to harness the potential of increasing generative AI while dealing with safety and security requirements—and [investing in] training and reskilling to ensure the workforce is not being left behind.”
- Citizens’ rising expectations and declining trust in governments. One leader underscored this theme, saying, “With digitalization and AI, the way we work and deliver services to the public and stakeholders is going to change. There will be greater expectations for the public service to do more and better with shorter turnaround time. There will also be higher expectations on the kind and quality of services we provide.”
- Escalation of geopolitical risk. The geopolitical landscape has become increasingly fragmented and volatile, leading to increased geopolitical risk. From energy shortages to supply chain disruptions and trade imbalances, governments are having to respond rapidly to new challenges and build national resilience. As one leader noted, these risks can also impact significantly on governments’ capacity to deliver core services to citizens, saying, “Once you are in the public eye, you end up dealing with things that are urgent, not important. For example, global conflicts create constant distractions from the things that actually matter to your voters—they are not the structural changes you are in office to deliver on.”
As we pointed out in our previous article, public sector leaders face significant constraints on their ability to navigate disruption successfully. They must deal with the ever-changing political dynamics and complexities of cabinet government, a high degree of external scrutiny, and limits on their ability to influence resourcing. They must also manage asymmetric incentives—with failed programs bringing potentially severe, personal consequences for top leaders, while successful programs can bring few rewards.
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Purpose as engine, character as compass: How the best leaders deliver
Despite the disruptions and constraints that public sector leaders face, there are many examples of leadership that has driven transformative impact for governments and societies. Through our survey, we sought to pinpoint the characteristics of these excellent leaders who succeed in transcending the inherent limitations of their operating environments.
When we asked survey respondents to identify the indicators of excellence in senior public sector leadership, the ability to define a clear purpose and vision emerged as the most important capacity, cited by nearly 70 percent of respondents (Exhibit 4).
Crucially, the best leaders match this visionary quality with the capacity to drive execution: The majority of respondents cited leaders’ ability to get things done as a top indicator of excellence. A complimentary trait—the capacity to uplift departmental culture and health—speaks to leaders’ essential role in mobilizing and nurturing their teams in an environment of disruption.
Perhaps the most striking finding of our research, however, is that these elements of leadership excellence are underpinned by character, values, and integrity. Respect for character was the second-most cited indicator of leadership excellence, but it leapt into first place when we asked respondents to identify the most remarkable leaders they had worked with in the public service, and to tell us what made them stand out.
We heard how these leaders’ character had enabled them to excel in direction-setting and delivery. One respondent cited a leader who demonstrated “courage in sticking to a vision of radical change rather than taking the safe route and pandering to accepted wisdom and business as usual—the approach so common in the public service.” Admiral Thad Allen, who as commandant of the US Coast Guard led federal disaster response in the wake of Hurricane Katrina, emphasized the importance of “demonstrating the content of your character by your behaviors . . . . [especially] when you are most stressed professionally, physically, and mentally.” He added, “That is the time that you can have your greatest impact ever as a leader.”
These stories suggest that character is the compass for delivering impact in a complex world. This quality was summarized as “moral courage” by one respondent, and as “innate leadership and charisma” by another. Our findings echo the dictum of US General Norman Schwartzkopf, who famously said, “Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy.”
Excellence in action: How public sector leaders hone their craft
The best public sector leaders are masters of both the art and science of steering large organizations—or “turning the tanker”—to deliver impact amid complexity. In our survey, we shone a spotlight on the elements that public sector leaders felt they had mastered, as well as those where they sensed gaps in their capabilities. Of the six practices of excellent leadership, the highest ranked in this self-assessment were set the direction and mobilize through leaders—while respondents saw cocreate with stakeholders as their weakest practice (Exhibit 5).
We also asked respondents to tell us how they allocated their time across the key elements of leadership excellence. Reflecting the primacy of this practice, leaders allocated the greatest share of their time to setting their organization’s direction, vision, and strategy—with 65 percent of respondents saying this was either their first or second priority in terms of time allocation. As mentioned, direction-setting was also the leadership practice where our study participants self-rated their capabilities highest: Twenty percent of respondents saw themselves as recognized leaders in this area, while 40 percent rated themselves as strong. Only 15 percent said they needed to develop or improve in this area (Exhibit 6).
Other major focus areas for leaders—with roughly equal time allocated to each—are navigating the government, mobilizing the organization, and nurturing culture and talent. However, leaders’ rating of their effectiveness differed significantly across these practices. While the clear majority see themselves as recognized leaders or strong in mobilizing their organizations, most see gaps in their ability to navigate the government.
Two essential leadership practices see much less time allocated to them by our respondents: managing personal time and resources effectively, and orchestrating external parties. Barely 10 percent of respondents saw themselves as recognized leaders in these areas, and 20 percent or more conceded they needed to develop or improve these capabilities. On self-management, McKinsey’s recent research points to the value of an “inside-out” approach to leadership; the most effective leaders focus on leading themselves before they lead others.
These self-identified gaps in capability correlate with respondents’ reflections on their previous reforms and programs, and what they would do differently in future initiatives. The standout finding is the need to ensure the right skills and capabilities are in place (Exhibit 6). Two in five respondents said they would engage more with citizens or other stakeholders, and allocate resources earlier and more strategically. This suggests that many leaders recognize the need to put greater focus on alliance-making and fostering collaborative relationships.
The demands on public services have never been greater or more complex. They must deliver against an increasingly complex set of citizen needs in a fast-changing world, as budgets and workforces come under strain. At their best, senior leaders at the helm of public institutions are setting bold visions and galvanizing their teams to deliver. It’s no easy job. To succeed amid disruption, excellent leaders make character their compass.
